Commercial Litigation and Arbitration

New York Convention — Confirmation of Interim Arbitral Awards

The plaintiff in Hall Steel Co. v. Metalloyd, Ltd., 2007 U.S. Dist. LEXIS 41366 (E.D. Mich. June 7, 2007), commenced an action in federal court which, on the defendant’s motion to compel arbitration, was ‛remanded ... for arbitration in London, England in accordance with the parties' agreement.“ The defendant then sought and obtained from the arbitrator an interim award of more than $300,000 to compensate it for the fees and expenses it incurred in moving to compel arbitration. The defendant then sought confirmation of the interim award, to get its money. The District Court declined because the award was neither final nor responded to an immediate need for relief. The Court reasoned, first, that the well-settled requirement of finality as applied to confirmation of arbitration awards results from the fact that ‛most of the advantages inherent in arbitration are dissipated by interlocutory appeals to a district court, where such applications for interlocutory relief result only in a waste of time, the interruption of the arbitration proceeding, and delaying tactics in a proceeding that is supposed to produce a speedy decision“ (citation and internal quotations and brackets omitted). The Court recognized, second, that governing Sixth Circuit precedent held that "an 'interim' award that finally and definitively disposes of a separate independent claim may be confirmed notwithstanding the absence of an award that finally disposes of all the claims that were submitted to arbitration" (citation omitted). The defendant argued that this criterion was satisfied. Judge Gerald Rosen disagreed:

In this Court's view ... the Sixth Circuit's requirement of a "separate independent" claim is only a necessary, but not by itself sufficient, prerequisite to immediate confirmation of an interim award. Upon reviewing Island Creek Coal Sales and various other decisions in which the courts have found it appropriate to confirm interim awards, this Court discerns a common feature in addition to the "separate [and] independent" nature of the issue addressed in the award -- namely, that the party seeking confirmation was able to identify an immediate need for relief. ***

The common thread of th[e] decisions ... is that the courts have insisted upon some reason to overcome their usual resistance to piecemeal confirmation of a series of interim awards as each one is issued in an ongoing arbitration proceeding. As one court has observed, the interim awards in each of these cases "constituted a form of prejudgment remedy that would be expected in any district court."

Held, ‛[t]his justification for immediate confirmation is utterly lacking here.“ Motion to confirm denied.

Note: Although this is a New York convention case, the same principles apply to domestic arbitrations -- i.e., to any motion filed under the Federal Arbitration Act.

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